The SMART Way to Manage Your Money

By David S. Chang

When payday comes along, it’s easy to get excited about spending your money. Splurging on a few items of clothing or the latest home gadget will definitely bring you short-term enjoyment but probably won’t help your long-term finances. To ensure you are prepared for the future, it’s important to manage your money correctly and put a little aside each month for any unexpected circumstances.

Creating a spending plan each month will ensure you have enough money for the things that are important to you; it will help you keep out of debt and hopefully build a healthy savings nest egg along the way. There are plenty of free budget templates online that can help divide your income up sensibly, helping you stay on track and record your spending. It’s a great way to analyze where all your money is going at the end of every month. Here are some key points you should think about when allocating your money.

Pay Yourself
First

Yes, covering bills and buying food is essential when you get paid, but the most important person to pay first is yourself. Your circumstances will never change, and you will not be able to grow if you do not make investing in yourself a priority. Set aside a portion of your income and put it into a savings account every month; this can help you build tremendous wealth over time and it will be increasingly satisfying to watch it grow.

Cover Your
Bills

Next, you must make sure you cover all bills and credit card debt that requires payment. If you miss a month or two, it can be extremely difficult to get back on track. Write down the dates when any direct debits will be leaving your account and make sure you have the necessary funds available. An unplanned overdraft can be costly and daily fines can stack up.

Balance Your Disposable Income

It’s important to spend a percentage of your income on the things you love because what’s the point of working so hard in the first place if you can’t enjoy it? Take time to socialize with friends, spend an afternoon indulging in what you desire.

Life is all about balance and you need to make sure you allocate an amount of your monthly income for fun and social events, but it is always wise to set a budget. Don’t go blowing it all on lottery tickets. If you calculate how much you have available, your spending allowance won’t have a limitation and you’ll end up eating into savings and funds reserved for bills. Do not start spending until you have a figure in place. This will allow you to enjoy the month without feeling guilty or reckless.